Chapter 19
T/F - Customers always interpret a higher price to mean higher quality.
False
T/F - Electricity is an example of a product that is price elastic
False
T/F - Fixed costs vary with the number of units produced or sold
False
T/F - Profits for a firm are computed as follows: Profits = total revenue - fixed costs
False
T/F - The point at which marginal revenue equals marginal cost is the breakeven point.
False
T/F - Barter is the oldest form of exchange.
True
T/F - Costs are a major issue when establishing price.
True
T/F - Factors affecting pricing decisions can include demand, distribution, and the way in which the product is promoted.
True
T/F - For most products, the quantity demanded goes up as the price goes down.
True
T/F - Non-price competition allows a company to increase its brand's unit sales through means other than changing the brand's price.
True
T/F - Price is the most easily adjusted ingredient in the marketing mix.
True
T/F - Price is the value that is exchanged for products in a marketing transaction.
True
T/F - The purpose of the pricing concept is to quantify and express the value of items in a market exchange.
True
At the breakeven point, a. The money a company brings in from selling products equals the amount spent producing the products b. The total fixed costs are exactly equal to the total variable costs c. Profits are exactly equal to the difference between revenue and total variable costs d. The marginal revenue of a product is exactly equal to the marginal cost of producing one more unit a. The marginal cost curve and the average cost curve will be identical for a particular product
a. The money a company brings in from selling products equals the amount spent producing the products
At what point does a firm maximize profit? a. The point at which marginal cost equals marginal revenue b. The point at which the firm sells its product at the highest price c. The breakeven point plus the adjusted marginal cost d. The point at which marginal profits equal marginal revenue e. The point at which marginal cost equals marginal profits
a. The point at which marginal cost equals marginal revenue
If Umbro faces a standard demand curve that exists for most products, as it raises the price of its soccer balls, the a. quantity demanded goes down. b. demand remains constant. c. quantity demanded increases. d. demand increases initially, and then drops. e. breakeven increases.
a. quantity demanded goes down.
Which of the following products is most likely to have an inverted C-shaped demand curve? a. Visit to the dentist b. Eternity perfume c. Starbucks coffee d. Pillsbury cake mix e. Ford Escape
b. Eternity perfume
One advantage of nonprice competition is that a. A firm can react quickly to competitive efforts b. Market share becomes less important c. A firm can build customer loyalty d. Marketing efforts are completely eliminated e. Pricing is no longer a factor
c. A firm can build customer loyalty
The owner of Big Jim's Motorcycles is opening a new retail location. Which of the following is most likely to be a fixed cost for Big Jim's Motorcycles? a. Retail personnel salaries b. Advertising on Facebook c. Building rent d. Electricity e. Transportation of sold bikes
c. Building rent
If Norwegian Cruise Lines increased the price of its seven-day cruise package by 10% and, as a result, experienced a 20% decline in customer booking Norwegian's demand would be a. Steady b. Inelastic c. Elastic d. Prestige e. Marginal
c. Elastic
Price is a key element in the marketing mix because it relates most directly to a. The size of the sales force b. The speed of an exchange c. Quality controls d. The generation of total revenue e. Brand image
d. The generation of total revenue
The General Auto Insurance advertises its automobile insurance as "For a great low rate you can get online, go to The General and save some time!" General is engaging in a. Nonprice competition b. Demand-based pricing c. Cost-based pricing d. Price differentiation e. Price competition
e. Price competition
Which factor is least likely to affect pricing decisions? a. Competitive prices b. Legal and regulatory issues c. Organizational and marketing objectives d. Customers' interpretation and response e. Shifting stock values
e. Shifting stock values
Price is a. Money paid in a transaction b. Not important to buyers c. Of limited interest to sellers d. The most inflexible marketing mix decision variable e. The value that is exchanged for products in a marketing transaction
e. The value that is exchanged for products in a marketing transaction